MEMORANDUM OF UNDERSTANDING

This Memorandum of Understanding is made this _______ day of __________________, 2016

between the City of Kalamazoo ("City"), a Michigan municipal corporation organized pursuant to
and exercising the powers set forth in the Home Rule City Act, being 1909 Public Act # 279, as
amended, whose principal office is 241 W. South St, Kalamazoo, MI 49007 and William Johnston
and William Parfet as Lead Donors and Capital Campaign Co-chairs ("Lead Donors"), the City and
Lead Donors being collectively referred to as the "Parties".
The Challenges

The Parties acknowledge the following:

1. That in January 2014 the City Commission adopted the following Five Priorities to set the course
for the Citys future direction:
a. Create long-term fiscal stability/sustainability given new realities;

b. Build a high performance organizational culture by engaging the workforce;

c. Create a shared vision/future direction using intentional community engagement;

d. Continue to provide exceptional core municipal services;

e. Foster collective action to reduce unacceptable poverty- especially of children.

2. That in response to the broken Michigan municipal finance model, the City convened a Blue
Ribbon Revenue Panel in 2015 comprised of individuals who reflected a cross section of interests
and points of view to explore and recommend methods to address anticipated future City revenue
shortfalls.

3. That the Final Report of the Blue Ribbon Revenue Panel made several recommendations
regarding City revenue improvements, but acknowledged that those recommendations did not fully
address future anticipated City revenue shortfalls.

4. That the only option which clearly addressed anticipated future City revenue shortfalls,
imposition of a City Income Tax by voter approval, was not recommended by the Blue Ribbon
Revenue Panel.

Draft: Kalamazoo City Commission Meeting, October 24, 2016

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6. That City residents and property owners already shoulder a tax burden that frustrates efforts to
compete for new investment in the community.

5. That as part of the effort to update its Master Plan, the City has embarked on the Imagine
Kalamazoo 2025 community visioning process intended to develop a Shared Vision for the
community, create its future direction, and identify the resources needed to advance and achieve
that vision.

The Philanthropic Approach

The Lead Donors, recognizing the proactive efforts of the leadership of the City to define and
address the challenges that confront our community, agree:

1. To lead the Capital Campaign for the tentatively named Kalamazoo Foundation for Excellence, a
non-profit entity that will be created to last into perpetuity. The purpose of the Foundation for
Excellence will be to support the City of Kalamazoo operations as defined in the organizational
indenture document of the Foundation.

2. Upon the creation by the City and approval by the Lead Donors of the organizational indenture of
the Foundation for Excellence, the Lead Donors agree to raise $70.3 million to be utilized by the City
for budget stability, an ad valorem tax rate equal to a 12 mills (1.2%) rate as well as aspirational
projects as identified by Imagine Kalamazoo 2025. To facilitate the 2017 City budget process the
Lead Donors agree to begin the Capital Campaign in advance of the organizational indenture
document completion with the expressed purpose of raising $20.1 million dollars for the 2017 City
of Kalamazoo budget.

3. To actively promote the goal of having the Foundation for Excellence fully endowed by June 30,
2019.

4. The Lead Donors understand that the City will need to explore other revenue alternatives, should
the effort to fund the Foundation for Excellence fail.

5. The Lead Donors believe the Foundation for Excellence will last into perpetuity. As such the
Foundation will endure for generations to come beyond our current Mayor, City Commissioners,
City administrators, donors and citizens. The Lead Donors require that substantial research and
thoughtful deliberation be engaged in to create an organizational document that will stand the test
of time and include the appropriate governance structure that assures that the funds will be
administered as defined in the organizational indenture.
The Work

The City, upon receipt of the donation, will undertake the following commitments:

1. Create a separate City-controlled fund to receive the donations.

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3. Develop a budget for Fiscal Years 2017, 2018 and 2019, which incorporates a 12 mill (1.2%) ad
valorem tax rate for municipal purposes on real and personal property located in the City.

2. By August 31, 2017, establish the organizational indenture of the nonprofit Foundation for
Excellence entity, as permitted by MCL 117.4a, into which the donations and any additional
contributed money, from sources both great and small, shall be deposited to provide an
endowment so as to extend and continue the budget stability and programs made possible by the
donations.

4. Allocate $10 million in each of the next three Fiscal Year City budgets for Aspirational Projects, to
be funded by the donations, based on the results of the Imagine Kalamazoo 2025 process, the
recommendations of the City Manager and approval by the City Commission which may include, but
are not limited to:
a. Develop and commit resources to address generational poverty, promote youth
development and remove barriers to employment opportunities for youth, under employed
and unemployed individuals, and persons seeking re-entry to our community.
b. Address capital and human infrastructure and improvement/maintenance needs as
identified by the Imagine Kalamazoo 2025 process and the Citys Capital Improvement
Program.

c. Develop and implement neighborhood improvement efforts and projects which reimagine
and reinvest public spaces to attract and connect people.

5. Explore further budgetary savings that may be realized by shared service delivery with regional
municipal, post-secondary school educational institutions, and private partners.

6. Develop best practices and measures intended to show the impact of the donations on the efforts
and initiatives of the City to achieve the Five Priorities for the future direction of the community.
For the CITY OF KALAMAZOO:

__________________________________

_____________________________________

Bobby J. Hopewell, Mayor

James K. Ritsema, City Manager

__________________________________

_____________________________________

Clyde J. Robinson, City Attorney

Scott A. Borling, City Clerk

For the LEAD DONORS and CAPITAL CAMPAIGN CO-CHAIRS:

_____________________________________

William Johnston

William Parfet

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__________________________________

Draft: Kalamazoo City Commission Meeting, October 24, 2016